A company’s financial activities have a complicated nature and need to be handled carefully. Making important financial decisions is a delicate and challenging responsibility. It doesn’t matter if these decisions concern short-term needs or deal with long-term investment policies. A single mistake can often lead to significant damages that reduce the company’s overall profitability. That’s why organizations employ the services of a finance manager who advises them on matters of a complex fiscal figure. The manager supervises a firm’s different expenditures and makes sure that funds are utilized efficiently. Let’s talk about these professionals’ roles and responsibilities and how they benefit a business’s profitability and boost productivity.
A finance manager’s importance:
The primary responsibility of a finance professional is to review your statements and provide you with their feedback. Whether this feedback is negative or positive, the financial manager will suggest strategies to maximize its profitability. They also conduct risk assessments and business modeling to produce long-term business plans. Besides controlling budgetary expenditures, these analysts also conduct financial research into pricing and competitors. Financial experts aren’t massively available, so your company must quickly interview some skilled graduates in this industry. Here are a few essential roles of finance managers for you:
- Understanding capital requirements:-
The foremost responsibility of a finance manager is to discover the amount of capital required to keep the company operational. He/she will calculate the number of funds the organization needs for its short-term and long-term projects. Digitization is overtaking all aspects of modern human life, and companies can’t survive without investing in the latest technologies. So, the nature of expenditure on technology for business growth and expansion must also come into consideration.
- Raising and distributing money:-
We can divide the financial resources of a company into two categories, i.e., debt and equity. Debt means borrowing the required money to pay it back to the lender eventually. Equity refers to giving shareholders some stocks in your company. It’s the manager’s job to assess which method is more beneficial to the organization by comparing their pros and cons. The second phase is to distribute funds for optimal usage. This fund allocation depends on the firm’s size and growth patterns.
- Coach fresh employees:-
You might hire new employees and have to train them. But do these recruits possess fundamental job skills? A survey by the HBR (Harvard Business Review) found that 70% of employees didn’t have mastery of these talents. Therefore, financial managers are also responsible for training and educating new hires to equip them with necessary soft skills. Those who possess a master of accountancy degree from a reputable institute can quickly adapt. Furthermore, this coaching makes the workforce more productive and enhances employee retention.
- Creating adequate budgets:-
Budgeting is a crucial component of a company’s business strategies and projects. Budget-making helps your organization plan, assess, and control its financial activities. Managers monitor financial performance by ensuring that you stick to the proposed budget.
- Boosting workplace positivity:-
A 2018 survey revealed that just 51% of all American employees were satisfied with their work. Similarly, Gallup discovered in 2019 that only 35% of employees in the United States were enthusiastic about their job. So, two-thirds of workers were ‘actively disengaged’ at work. Such a negative attitude and lack of motivation can bring down the overall productivity of your company. Now, what’s a finance manager’s role in boosting workplace positivity? Like all managers, finance professionals can also motivate their team with some positive feedback, effective communication, and complete transparency. They do this by liaising with their subordinates and colleagues.
- Planning the profit:-
Finally, your company is prosperous, has achieved its objectives, and made some profit. But how will your firm spend its profit now? The company must invest some portion of this hard-earned cash in maximizing its gains and accelerating future growth. That’s where financial managers bring well-calculated insights regarding the proper usage of this profit. They understand the difference between fixed and variable costs. Fixed costs remain unchanged, and the output of your company doesn’t affect them. So, the rent of your workplace and employee salaries are fixed costs requiring proper management.
- Conducting market research:-
We live in a digital realm when informed decision-making has replaced guesswork almost in its entirety. Data dominates the majority of policy-creating procedures. Finance managers understand different types of data and their respective applications. They know that data categorization is either quantitative or qualitative. The former refers to quantifiable information, while the latter deals with knowledge. In contrast, market research considers both these types.
So, the number of visitors to your website is something you can measure. But the habits and interests of your customers are examples of qualitative data. Managers conduct market research to make sure you’re advertising to your target audience only. They also discover which features of your product are more lucrative to the consumer market. Since a company shouldn’t introduce products that yield little to no profits, finance managers must work with the products team.
A company’s primary goal is to survive financial setbacks and maximize its profitability. We can define profitability as a measure of your organization’s income after paying all necessary expenditures. A profit-earning organization can move on to any business’s next goal, i.e., growth and development. Finance managers ensure that every commercial decision that the company takes concludes in productivity and advancement. These professionals strive to meet the challenge of making more with less. Their job is to procure funds and utilize them effectively to impact the company’s bottom line. Hiring financial managers is a long-term investment your organization should make to multiply its annual gains.